Govt starving forex earners

Government’s effort to stabilise foreign currency exchange rate isstifling the generation of forex as it is not taking care of traditionalproducers. This has resulted in low export earnings, firms and experts havesaid.

Government recently introduced an official market for foreign currencytrade. But, this has failed to ease an acute dollar shortage. Several minerswho spoke to Business Times yesterday said production hiccupsoccasioned by foreign currency shortage has rocked the mining sector,especially gold producers, who are the highest earners of foreigncurrency in the country. They surrender a significant portion of theirforex earnings to the central bank as the country struggles for hardcurrency. This has dimmed prospects of significant growth.

Facing these challenges, several companies are struggling to restore growthand are laying off workers while they tackle higher production costs.Analysts who spoke to Business Times yesterday said the new forexmeasures have failed to adequately take into account the supply sideof foreign currency. They said the country’s economic developmentprogramme has been seriously interrupted, because supply of foreigncurrency continues to dwindle due to government’s failure to providethe necessary ingredients to cash cows to produce more. They are nowsuffering from serious consequences caused by the government measures.The oversight by government has hurt the earners of foreign currency.This has also hurt other industries.

Another handicap to trade is that aggressive pricing of raw materials especially by local suppliers. Companies still cannot absorb the higher production costs stemming from increased prices of raw materials.

Industrialist and the past president of the Confederation of ZimbabweIndustries, Sifelani Jabangwe told Business Times yesterday there isneed for a fine balance to facilitate stability of foreign currencyexchange rate whilst not chocking producers’ growth.

“Some producers need more than what they surrender. But, the privatesector need to step up and come forward with proposals because in theabsence of guidance, government will do what they think will work,”Jabangwe said.

Economist James Wadi agreed with Jabangwe saying efforts to stabilisethe exchange rate stifle supply of hard currency. “The worrying signs are that traditional producers, who earn foreign currency, are not taken care of. They are choking because government is not providing the necessary ingredients to produce. This is worrying. That’s the impact of the measures introduced by government,” he said.

“There is need to urgently address issues hampering producers offoreign currencies. That is the biggest issue. Let’s make basic thingswork. There is a credibility issue policy wise here. The hiccupsworsen the situation.”

Another economist, John Robertson said exporters are failing to meetrequirements to import raw material required to produce for exports.

“That’s a huge challenge. This means companies are downsizing andpeople losing losses in the process,” he said.

Zimbabwe firms are failing to access from the interbank market whererates are higher than the parallel market.

Investment analyst, Itai Chirume said the interbank market remained ‘elitised’. “As long as the interbank market remains elitised, the parallel market remains as it is the only viable market.”

Economist Eddie Cross concurred with Chirume saying: “It (interbankmarket) does not exist. All the banks with their money look aftertheir clients. Let’s get the monetary committee now and supervise theprocess.”